inches long and a 17-inch tank. blood sugars are down. the baby is not breathing on his own. we'll keep a close eye on baby jamichael, a big kid. that's it for me on "wake-up call." "american morning" begins right now. >> good morning to you. i'm kiran chetry. a lot going on. let's get you caught up. the end of the line for the "news of the world." the british tabloid shutting down after sunday's edition after new reports that the paper reportedly tried to hack the phones of 9/11 victims. a deal to raise america's debt ceiling still out of reach. talks continue today with the president warning we have ten days left to get an agreement or risk default on this "american morning."

and good monday morning to you. start of another week here on "american morning." it is july 11th. nice to see you back. >> great to see you. >> the shuttle went off on the first try. >> i couldn't believe it. we were all thinking the weather was horrible but it went off. can't get the three of us together a whole lot. christine is off. >> summer vacation. >> no deal on raising the debt ceiling. last night talks at the white house fizzled out. president obama making it clear with 23 days to go before america defaults on its debt, congress has got to agree on a plan to raise the debt ceiling within the next ten days. president obama and top congressional leaders will try again today and all week if they have to. the president will hold a news conference this morning at 11:00 a.m. eastern. dan lothian is at the white house this morning. dan, what's holding up the deal and what's the president going to be talking about at 11:00 this morning? >> look, the bottom line here is tax hikes even for the wealthy

americans, republicans saying in this economic environment, this is not the time to boost taxes. but the white house believing this is the only way to get the revenue they need to reach those numbers. as you pointed out, no agreement in that meeting yesterday, so the president calling on these congressional leaders to return to the white house today for more talks with an eye on what could pass both houses. now the meeting yesterday lasted for about 75 minutes, wrapped up when those congressional leaders went back to their staff to start hammering out some of the details. the bottom line here is that the president is still pushing for a bigger deal, up to $4 trillion in cuts and also tax hikes because he believes now is the time to essentially seize the moment to do something that's good for the economy, long term, and the president not willing to accept any kind of smaller deal. we heard the same thing from treasury secretary timothy geithner when he made his rounds on the sunday morning shows. >> this is hard.

you know, it's politically very hard. this is a grave moment for the country. we need to do something very big, very substantial, to bring our long-term deficits down over time. we have to do that in a way that's good for the economy, give more support for the economy healing from the great recession and require both sides to compromise. >> so right now, what happens, well republicans thinking that what they were able to accomplish in the biden talks, the biden-led group, is probably the most viable option. we heard that from speaker boehner yesterday. so it will be interesting what happens as those leaders return here to the white house today. of course we heard from the democrats yesterday saying they're willing to stay at this until they get something done, ali. >> kind of weird to see it was sort of 75 minutes of negotiations yesterday. we do 75 minutes a day we're never going to get this deal done. i know you're working more than that. in the next hour of "american morning," we're going to try to hash out specifically the issues that divide the two sides when

we're joined by congressman steve israel of new york and congressman tom price of new york. >> people that are digging in to completely polar opposite positions, liberals as well as conservatives and those in the middle trying to get a deal done it's proving to be difficult. leon panetta rallying the troops in the war zones in iraq and afghanistan. he is in baghdad this morning where he's meeting with u.s. forces as well as iraqi leaders. he says iraq has to do more to prevent insurge attacks on americans with iranian weapons. >> i would like for iraq to exert more of an effort to go after those extremists that are making use of these weapons, that if you are going, they have a responsibility to protect against that kind of attack occurring. >> all 46,000 remaining american

troops are withdrawing this year under an agreement between the two countries. iraqi leaders are debating whether to request u.s. troops stay in the country beyond 2011. this morning, pakistan telling america, keep your money, after the u.s. announced it's withholding $800 million in military aid. this is more evidence of the growing rift between the u.s. and pakistan. white house chief of staff william daly says it's in response to pakistan's decision to cut back on counterterrorism operations after the killing of osama bin laden. the u.s. typically gives pakistan more than $2 billion a year in security assistance. u.s. joint chiefs of staff admiral -- chairman admiral mike mullen says china should no longer be described as a rising power, declaring it's a full-fledged world power hp he made the remarks at the start of a four-day visit to beijing. he called on china to become a global partner in addressing security challenges in asia and

beyond. jay si dugard speaking about her 18 years in captivity at the hands of philly and nancy garrido. she was 11 when kidnapped by garrido, a convicted sex offender, as she was walking to school. she talked about the long, horrifying ordeal with abc's diane sawyer. >> you would never know what she survived unless you notice how her face changes when she speaks of the past and the charm around her neck, a pine cone. >> back then it was the last thing i touched. the last grip on me. now it's a symbol of hope and new beginnings and that there is life after something tragic. >> amazing that she's turned out the way she has. she's 31 years old.

again, she raised two children that were fathered by the guy who kidnapped her. >> a lot of stories i understand. this one is very hard for me to understand how she appears to be a normal person. >> yeah. and she wrote the book "a stolen life" being released tomorrow and that's why she is doing some interviews to talk about it. >> truly remarkable. reports of a casey anthony confession by the way, if you've been seeing this pop up in your facebook inbox, turn out to be an internet scam. experts at pc world uncovered the scam on facebook, say clicking on the confession link allows attackers everyone in your facebook network. casey anthony is set to be released from prison this coming sunday. a day after the "news of the world" ends basically, there are more stunning allegations now against the paper. "the daily mirror" of london reporting staffers tried to hack into the phones of 9/11 victims. rupert murdoch arrived in london meeting with the chief executive of his newspaper division, rebekah brooks, headed up "news

of the world" and murdoch is publicly backing her, insisting she didn't know what was happening. the final edition of the paper was published yesterday. 5 million copies were printed, that's nearly twice the usual run. the paper also issued a full page apology. dan rivers is live in london this morning with more on this. a lot of people wanted to get their hands on that final edition. >> yeah. it's ironic, isn't it? a paper that has been the subject of such revulsion here, and public outcry, when they announced they were putting out that final edition they had to double the print run, such was the demand. i suppose many think of it going to be a piece of history, really. it's been going for 168 years. it is an institution here. now news perhaps victims of 9/11 could also have been targeted by the illegal practices of the "news of the world," hacking into their phones. this has not been confirmed by cnn. this is coming from a newspaper here, a rival tabloid, "the

daily mirror" saying a former new york policeman was contacted supposedly by journalists from "news of the world" trying to get phone numbers of the families of victims. but it does fit in with the picture, i suppose, that they were willing to go to almost any lengths to get a story during those years. albeit hacking into the cell phones of murdered school girls, the families of fallen soldiers in afghanistan and if this is true, the families of people killed in 9/11. >> dan rivers, wow. thanks so much. how far will newspapers go to get a story? especially in terms of tabloid journalism? we're going to be speaking about it at 6:40 when we're joined by the editor at large of "the daily beast." >> one of the things we want to know, how far they go here in the united states to get those stories. troubling trend for workers who smoke. more and more companies are charging employees who are smokers higher health insurance premiums. it's our question of the day. is it fair to ask employees who

smoke to pay more for health insurance. send us an e-mail, tweet, tell us what you think on facebook. women's world cup semifinals. >> oh, my gosh. that was crazy. >> one of the most riveting -- being serious? i know you're not a huge soccer fan. >> i went to the world cup finals. >> you only went there because cool people invited you. not that you wanted to see the game. >> i went on my honeymoon. >> anything to avoid those talks. in a shoot-out yesterday, the u.s. stunned brazil. you were into this yesterday? >> yeah. >> it was tied 2-2 and then the u.s. edged brazil, 5-3 in penalty kicks, and check out what has to be one of the most amazing goals ever, here it is. >> can you believe this! >> that was megan rapino, blasted it from 30 yards away, abby with the header into the

back of the net. they're playing france on wednesday. you're not going to be in wednesday? >> i will be in. i was at a baseball game and they were showing this game on the screen while the baseball game was going on, that's how big a deal that was. >> we were watching on saturday at the pool. they had one little tv, about four deep with guys because derek jeter's five hits. >> passed his 3,000, 3001, 3002, 3003. >> this was bizarre. >> hit with -- that was a car -- >> yeah. >> for a tv station. >> french tv station car sideswiped the rider sending him into another competitor. right into a barbed wire fence. apparently they both escaped with only cuts and bruises although barbwire cuts hurt. like true athletes they got back on their bikes and finished the race. the two cyclists were awarded a prize for most combative.

>> how do you know barb wire hurts? >> no authority, no. >> he did it. derek jeter has joined one of baseball's exclusive clubs. the 3,000 hit club, the 28th player and only yankee ever to do it. jeter smashed a homer in the third inning off tampa bay's david price on saturday. the ball flying into the first row bleachers in left field, into the hands of life-long fan christian lopez, who showed class, returned the historic ball, back to jeter, got a standing ovation. >> look at them trying to get that ball out of him. >> i know. he didn't ask for anything in return. but the yankees did one better, gave him tickets in the luxury box for the rest of the season. and he got a picture taken with his hero. that's -- that's pretty cool. >> jeter keeps the ball. he keeps the uniform he was wearing that day. the bat, the helmet. you know, the glove. >> 3,000 hits, you know, you're entitled to a few things. coming up on "american morning," sharks, an unwelcomed

sight for many sun worshipers. where the great whites are. >> i would faint on sight. potentially and dangerous potentially deadly heat wave crossing the country. temperatures soaring into the triple digits in many places today. reynolds wolf has our forecast after the break. from the red carpet to skid row, prince william and catherine, the duke and duchess of cambridge, made their weekend in tinseltown quick. we'll tell you what they were doing on skid row. you're watching "american morning." it is 13 minutes after the hour. i'm robert shapiro.

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welcome back to "american morning." wreckage from a statellite is o a potential collision course with the international space station and the space shuttle "atlantis." this morning at 3:02 eastern however, the crew woke up to the sounds of "tub thumping." ♪

>> that's a good song to wake up to. gets you going. "atlantis" crew members transferred equipment and supplies to the space station. on sunday "atlantis" docked by executing what's called a backflip. check out how it docks. it's totally a backflip. >> that is so cool. >> it rolls over. its underbelly is up. this allows crew members to check for any problems. i would think you would use cameras for that. at the space station the astronauts will research the potential for a space refueling system. the mission, as you know, the last one of the 30-year space shuttle program. you asked a good question as we were getting ready for the show, why do they need to be woken up at 3:02 in the morning, to which brian our producer said space, it's not 3:02 in the morning there. it's just time. >> just time. eight hours, happens to be 3:02 here, on a strict schedule. that's all controlled by houston. >> right. this is not the most comforting sight. great white sharks spotted off the waters of cape cod.

three of them actually. officials are warning swimmers to stay away from seals because that's a favorite snack for sharks. but the sightings are, of course, attracting some tourists. local venders are cashing in. stores are offering plenty of shark-themed gifts and souvenirs. no beaches have been closed yet. >> all right. i wouldn't be tempted to be near a beach where there was a shark sightings. >> i love don't hang around with the seals. i don't know where the seals are. >> okay. >> i was going to hang out with the seals for the day but the sharks made me think otherwise. >> the only thing that would be compelling with the sharks around is the heat in the country. it's sweeping through the central and southern plains this week. the temperatures reaching triple digits, 15 states are under a heat advisories. that means temperatures are expected to exceed 105 degrees. the warnings remain in effect through tomorrow. officials suggest staying indoors as much as possible. >> 18:30 past the hour. check in with reynolds wolf. nobody is escaping this heat wave, at least in this country.

>> absolutely. i would say at least a third of the nation is going to be dealing with temperatures that are well above normal. we have records that have been set across much of the landscape. who got what coming up in a few moments. one of the first things you're going to do, some of you, try to hop on a plane and get to your point where you're trying to get to. it's going to be a tough haul for you in chicago and detroit. delays possibly over an hour, delays possibly in tampa and miami, denver even into san francisco. the midwest the big issue is going to be a cluster of thunderstorms that have produced over -- up to 6,000 lightning strikes. north of des moines, everything pushing towards milwaukee and chicago. the reason for the delays. the temperatures have been coming up. wichita, 111 degrees, dodge city 108, 107 in tulsa, joplin with 106, this reading in joplin the highest in a quarter of a century. oklahoma city to 105 and we can anticipate that heat to be as

brutal today. in fact, i mentioned a great chunk of the country south of the great lakes into parts of the ohio valley, even into the central plains going to be rosy. the heat index the temperature with the high humidity will make things ridiculous. little rock 111, st. louis 112, 106 nashville, 109 into montgomery. as we wrap things up, tomorrow you will notice basically the same deal. take a look at 106, 110 montgomery, how it's going to feel in columbia with 110 degrees also. brutal times, it is summer. be careful out there and take it easy. pitch it to you in new york. >> it's so red it's purple. that means stay inside if you can. >> usually that's a good plan. roasting the map so hot. >> pocket square, i love it. >> real deal holyfield, use it on days like this. >> thanks, reynolds. >> it was a world wind weekend in california. prince william and catherine, duke and duchess of cambridge

headed on their north american tour, playing polo, raising money. >> he's keeping busy. the polo thing. it's ending. from the glamour of the red carpet to the grittier side of los angeles, the couple made the most of their quick visit. max foster joins us live from los angeles. i keep seeing these references to them being on skid row. what is that about? >> yeah. it's been a wirlds wind as you said. they fitted in so much over the weekend in california. they're back in the u.k. now. i know they're looking forward to hiding away in north wales. it's been really intense 11 days for them across north america, ending up in california. let's have a look. >> reporter: after taking canada by storm, it was time to visit california. the duke and duchess invited some friends around to the console general's house where they were staying. it was off to santa barbara for a game of polo. the duke in his open words, looking forward to letting

loose. his team won. a proud duchess presented her husband with a trophy and a kiss. on saturday night, they hit the red carpet. >> the duchess has arrived and she hasn't disappointed. >> reporter: the dress by alexander mcqueen, wowed the a-listers inside from the red carpet to skid row. on sunday the couple threw themselves into an art class with kids from this very deprived neighborhood. the artistic duchess showing her skills. and their last engagement was a war veterans job fair. >> this is the final step on this very successful north american royal tour, but in many ways this is the most important stop, particularly for the duke. >> i would just say on behalf of us both, how grateful we are to have been welcomed so warmly in the golden state and city of angels. thank you so much. >> reporter: public would have like to have gotten closer to the couple in america but the trip has confirmed them as the biggest stars on the planet right now.

>> there you go. the tour has ended and the whirl wind has ended. i'm sure they're looking forward to resting after all of this. a great success in canada, a success in california. it was their first tour and i think they're pretty pleased with themselves into we've heard nothing but kudos for them. >> one errant gust of wind blew up her dress at one point and everyone went crazy about that. what are you going to do. >> that's right. you had all these photographers following them, waiting for the moment to catch them off guard. never happened. >> very good. max, hope you have enjoyed it. i know you were working hard but it was a fun trip all around. max foster for us. ahead on "american morning," if you want to get a free credit score it's going to become easier to do that. we'll explain ahead. >> the rihanna concert that got too hot literally. the fire that sent the fans home early. >> is it fair to ask employees who smoke to pay more for health insurance. send us an e-mail, tweet, tell us what you think on facebook.

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26 minutes after the hour. minding your business this morning. u.s. stock futures are trading lower ahead of the opening bell so far, after the dismal jobs report on friday pushed the dow, the nasdaq and the s&p 500 lower for the day. stocks were actually higher overall last week. alcoa, america's largest aluminum producer, kicks off a week full of second quarter earnings on wall street today. that report comes out after the closing bell. google, jp morgan chase, yum brands, citigroup are releasing earnings. federal reserve chairman ben bernanke will face tough questions about the economy after the weak jobs report. he test fis on wednesday. coming to a store near you, more electronic receipts. more retailers offering to send receipts by e-mail to save

paper. nordstrom and gap started a few months ago, watch out you could get store offers clogging up your inbox if you give out your e-mail address. pepco is the most hated company in america according to a new american customer satisfaction index. frequent power outages gave them the title. second place, delta, customers plaining about shelling out more for food and drink and baggage fees and time warner cable to the third spot, facebook making it to the top ten daas of privacy concerns. want a free credit score get rejected for a loan. lenders have to tell you what prevented you from getting a loan or credit card. the new measure goes into effect on july 21st. don't forget for the latest news about your money, check out the all new cnnmoney.com. "american morning" will be right back after the break. hey, the new guy is loaded with protein! really? 25 grams of protein. what do we have? all four of us, together? 24.

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it was over, still no agreement. the president is warning we have just nine days to raise the debt ceiling or risk default. the british tabloid "news of the world" silenced forever. the final edition rolled off the presses yesterday. now it's being accused of trying to hack the phones of 9/11 victims. the newspaper is apologizing for the hacking scandal that forced its owner rupert murdoch to shut it down. the midwest in the grips of a smothering heat wave that's not letting up. 15 states are facing heat advisories today. that means temperatures could top 105 degrees. the cities in four states, missouri, oklahoma, tennessee, and indiana, could see the heat index top out at about 115 degrees. relations between the united states and pakistan may have hit a new low. the u.s. announcing it's withholding $800 million in military aid. the response from pakistan is interesting. it's defiant. cnn's reza sayah is following this for us. >> live in islamabad.

something that has been talked about a lot, this threat hanging over the relationship. will we take away money. they seem to answer saying, do it. >> yeah. the message from pakistan is a defiant one. they're essentially saying you can keep your money, we don't need it. he spoke with a spokesperson for the military here and he claimed pakistan has been launching these operations against militant groups in northwest pakistan without u.s. help and without u.s. money and he claimed that those operations will continue. the problem is, those statements don't square with previous demands made by the pakistani government from the u.s. demands for more money, more resources, precisely to fight these militant groups. he sees some gamesmanship there by pakistani officials. if you look at the move from washington, the withholding of $800 million. a move that could substantially change the complexion of this troubled relationship. previously out of washington, we had heard a lot of accusations,

finger pointing, rhetoric, this is certainly more than rhetoric. it's a specific move that can impact this relationship and it's basically sending a message to pakistan that we're not happy with your cooperation, your efforts and if you want to continue to get our money and help you have to make some changes. it signals a more aggressive approach. the problem is, a more aggressive approach hasn't always gone over well in pakistan. they've never liked this, what they call this carrot and stick approach. they view it as disrespectful and i think already, many top officials here in pakistan are seeing this move from washington as disrespectful and underscores the troubled and uncertainty of this relationship, guys. >> all right. reza sayah in islamabad, thank you so much. defense secretary leon panetta making his first visit to iraq in his new role. meeting with u.s. troops scheduled to leave iraq by the end of the year. panetta plans to press iraqi leaders for a decision on whether they want u.s. forces to

remain beyond this year. joint chiefs chairman admiral mike mullen says china is no longer a rising power, it's a bona fide worl power. mullen's remarks coming at the start of a four-day visit to beijing. the trip is one of his last as america's top commander. mullen is retiring in the fall. a brazen jailbreak caught on tape. it happened last month in huntsville, texas. inmates staging a fight to get guards to open the door to a secured area and then two prisoners run for it. one of them escaped after a scuffle with guards. but was captured three days later. a fire at a rihanna concert in dallas sent everyone home early friday night. a malfunction with the pyrotechnics, sparks then fell from the top of the stage. there you see it happening afterward. the pop star tweeted we set the stage on fire tonight literally. promising her fans in texas, i got to come back. coming up on "american morning," it's the end of the line for the british tabloid "news of the world."

it's been shut down over a remarkable phone hacking scandal. now could tabloids here in the u.s. be using the same kind of tactics? we're going to ask the editor at large of "the daily beast," lloyd grove. >> we want to hear, is it fair to ask employees who smoke to pay more for health insurance. some companies are considering doing it. send us an e-mail, tweet, or facebook. we'll read your comments a little bit later. 4 stand in the way of them. protect your family with the gift of financial security. backed by the highest possible ratings for financial strength. new york life. the company you keep.

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welcome back. after years, 168 years, in fact n circulation, the british tabloid "news of the world" has been shut down. 5 million copies, final edition, rolling off the presses yesterday, selling out in many locations. the tabloid was bowing out in disgrace. phone hacking scandal, particularly serious one, involving thousands of sports stars, royal aides, politicians, celebrities and even the voicemail of a missing murdered girl giving her family false hope she was still alive after she saw activity on her phone line. it was really a tragic situation. >> and today reports of possibly hacking into the voicemails of

9/11 victims. joining us now is lee grove, editor at large of "the daily beast" and gossip columnist for the "new york daily news." we talk about the tabloid culture here. this seems to be taken to the extreme with the "news of the world." how hard core is the tabloid culture in london? >> it's tremendously hard core to the point of being illegal, obviously. in 2003, rebeckah brooks, kind f had a gaffe, meaning honesty, and told parliament in a hearing that they actually paid police and also said that bugging, you know, secret transmitting devices, all that, was fine if it was in the public interest. but i think she was confusing the public interest with interested the public is interested in it. >> that's a very interesting distinction you just made. public interest versus public being interested. even in the united states, people are paid off for things

for stories. where is the line? where do you draw the line? >> "the national enquirer," "the star" they've been gauged in quote/unquote checkbook journalism for a long time. can i say that television, news operations sometimes do that. >> people do pay for things. sometimes it's not a straight payment, but sometimes it's payments -- >> licensing for video. >> we pay for licensing for video. >> photos. i mean $15,000 for a photograph and then sit down for an interview, that's how, you know, a large news operations get around that. and it's legitimate or not, depending on your opinion. in the mainstream media, even in the tabloids in the united states, that's not a very common practice. i was at "the daily news" for three years. we didn't do that. i don't think "the new york post" does that. >> is there a distinct. do people understand the distinct between tabloid television and mainstream newspapers and how much of those lines blurred over the years.

>> if you mean by people, consumers, the answer is no. it's all one big sort of i'm a consumer all this stuff is coming over. a lot of people tell me that they get their news from "entertainment tonight." i don't think the public at large makes these distincts and i'm not sure if they understand or care about the implications. i mean with 9.2% unemployment, you know. >> let's go down the continuum. what the "news of the world" ultimately is accused of doing, in its most heinous, was hacking into people's phones, their voice mails, checking their messages, tapping their conversations and in the case of this missing girl, her voice mail was full and then they would check the messages and delete them. and then the parents would be able to leave messages, making them think she's checking them. >> sure. >> clearly we cross a line beyond paying for information and photographs into something that most people on the street would think is illegal. >> that's pretty heinous.

and, in fact, it's a huge political issue in britain right now. i think the parents of milly dowler are going to meet with david cameron later this week. >> do these behaviors you describe, does one lead to another? in other words, does paying for photographs and licensing lead to eventually thinking it's okay to hack or was there an absolute line that was crossed? >> well, i mean, if hacking of, you know, politicians might have been a gateway drug as it were to hacking murder victims, and -- i mean, it seems like all bets are off in the uk. there was nothing they wouldn't do. >> for the staffers point of view, i was reading a couple articles, you know, many of them said look, we didn't -- there were a lot of good people here that didn't have anything to do with it and we're out of work now and they're very insensitive that it woman who oversaw the paper rebekah brooks has hung on and has the support of the head honcho rupert murdoch and

they're very upset about that. how is its person in charge was able to keep -- her hand in it, keep working at the company when the paper folded. >> i'll tell you what, news corp is a publicly traded company and it does have a board of directors but there's one guy who counts and that's rupert murdoch. if rupert murdoch decides he wants to keep this person, posed with her in front of his house yesterday, that for the moment is it. on the other hand, it's a huge political firestorm in britain and might not last. >> this was a business decision. advertisers over the last ten days had been pulling out, their biggest advertisers. some are saying they're going to pull out from all of the associated publications. this wasn't a big part of the revenues, but is this a big blow for news corporation and that group? >> well, even more important than the newspapers, how this is threatening a big deal to acquire the 100% of the

satellite television operation there that news corp controls but only owns 30% of now. so, i don't know whether, you know, this will happen. i mean, the labor party is saying let's day this and, you know, the stock is plunging. it could be a huge blow to news corp. >> all right. lloyd grove, editor at large of "the daily beast," thanks for being here. >> my pleasure. >> straight ahead on "american morning," new research shows how damaging secondhand smoke can be to your kids. also jogging while listening to your ipod can be dangerous. why some states want to crack down on distracted exercising. you're watching "american morning." it's 44 minutes past the hour.

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47 minutes past the hour. here are a look at your headlines. they will try again today. president obama and congressional leaders return to the white house in an effort to negotiate a deficit reduction deal. the meeting last night left them no closer to resolving their differences. the british tabloid "news of the world" shutting down after sunday's final edition. new reports allege the paper tried to hack the phones of 9/11

victims. nasa still tracking a chunk of space debris, but officials now say they don't believe it poses a threat to the shuttle "atlantis" and the international space station. no flight adjustments are being made to avoid the debris, which is said to be wreckage from a 1970s satellite. the golf world awaiting a special announcement later today from tiger woods. his message will be broadcast on the golf channel at 11:00 a.m. eastern time. and it's a heat wave all right. dangerously hot weather is expected in more than a dozen states today. with temperatures hitting 105 degrees or higher in many places. another big box office weekend for "transformers dark of the moon" the sci-fi thriller was the number one movie taking in an estimated $47 million. the comedy "horrible bosses" made $28 million. you're caught up on the day's headlines. "american morning" is back after this break.

welcome back to "american morning." it is 51 minutes after the hour.

which means, you know what that means? >> house call. >> time for an a.m. house call. tuning out during your outdoor workout could be hazardous to your health. some states are moving to crack down on disdraktsed exercising. in new york, for example, there's a bill in the works to make it illegal for walkers and joggers to use any kind of electronic device while crossing the street. in oregon and virginia, a measure would fine bicyclists as much as $90 for riding under the influence of technology. >> first of all, why don't they go after drivers on highways that literally have noise canceling head phones on going 80. >> you see people crossing with headphones on. >> doing this across the street. >> constantly -- i will walk off a bridge one day. >> i know. >> just because i'm doing this. >> i hope i have my iphone rolling at the time. >> and then you'll save me, right? >> all that was, that story, another excuse for ali not to exercise, right? >> that's right. if i can't exercise with my ipod

i'm not exercising. i was going to start this week too. >> now it's delayed again. >> this is what it's going to look like for a long time. >> two new studies take a look at the impact of secondhand smoke on children. one says that kids exposed to secondhand smoke in their homes is 50% more likely to have learning disorders, a second smaller study saying most kids exposed to secondhand smoke think it's nasty or gross and researchers say they are less likely to become smokers themselves. i have a lot of friends who said that after riding too many years in childhood in a car basically a cloud of smoke, never touch it. for health news 24/7 go to cnn.com/health. in major u.s. companies with penalizing those who smoke. it seems to be picking up speed. they're asking smokers to pay higher health insurance premiums than their non-smoking colleagues. >> brings us to our question of the day, is it fair to ask employees who smoke to pay more for health insurance and we're getting a lot of responses. betty writes on our blog --

>> but she brings another issue in here, we're not talking about charging everybody who doesn't have a healthy lifestyle. >> that's right. >> more for insurance. we're picking smokers. what about people who just eat poorly or don't exercise. >> lot of people have written about that. >> people like me should be excused. i'm not exercising because it's illegal to listen to your ipod. josh writes on facebook i smoke and the answer is yes. it's not just fair but necessary. however insurance companies should do their part by covering smoking cessation drugs, nicotine patches and gum. an addiction as bad as heroin and it's time for the carriers to help people quit.

>> except if you're healthy and don't smoke or drink. why should you get your costs raised. >> everybody who does something wrong, i believe, whether it's drinks too much, smokes, doesn't maintain a healthy diet. >> another comment off twitter, sort of a similar sentiment, unless they're going to charge more for obesity and alcohol consumption it's not right to single out smokers. >> all right. keep your comments coming, send us an e-mail, tweet, tell us on facebook and we'll read more of your comments later in the program. just ahead, popping up next to starbucks and subways places lined with virtual slot machines and people hoping to hit the jackpot. are these places legal? have they found loopholes in some prehistoric laws. poppy harlow goes undercover to find out. ♪ ♪ ♪

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personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. they've stopped the presses at the "news of the world." the british tabloid shut down over a phone hacking scandal and now comes a new report that says the newspaper actually targeted 9/11 victims. we're live on this "american morning."

good morning. it's monday, july 11th. i was pausing for effect. >> yeah. good. >> welcome to "american morning." i'm ali velshi. >> i'm kiran chetry. christine romans has the morning off. >> i was waiting for christine to talk. >> you found out? >> she's not here. the countdown to any type of economic meltdown could be days away now. president obama making it clear that with 23 days left to go before america defaults on its debt, congress needs to agree on a plan to raise the debt ceiling in the next nine days. the president met with top congressional leaders yesterday at the white house. they say no progress was reported, but they'll go back at it again today. dan lothian is live at the white house this morning. what are the biggest sticking points? what's holding up this deal, dan? >> it's really about taxes. republicans saying that they don't want to see any tax increases even on the wealthiest americans, because of this economic environment. as we've pointed out, there's a lot of optimism going into that meeting over last few days, and then house speaker john boehner

essentially backing out, abandoning those plans for that bigger deal which the president wants to do, up to $4 trillion in cuts and also tax hikes. the president not backing away interest that, despite what mr. boehner has done, and has invited those congressional leaders back to the white house today to continue their discussions with an eye on what could potentially pass both houses. we heard from yesterday on the sunday morning shows treasury secretary timothy geithner, pretty much the same message the same from the president, that the big deal is the best deal for the country for the long-term good of the economy. >> this is hard. it's politically very hard. but this is a grave moment for the country. we need to do something very big, very substantial, to bring our long-term deficits down over time. we need to do that in a way that's good for the economy, so we give more support to this economy still healing from the great recession and it's going

to require both sides to compromise. >> reporter: so what happens next? speaker boehner and other republicans want to see sort of that mid-range plan, what we saw from the biden group. they thinks that that's the most viable option. it will be interesting to see what lawmakers can come up with as they return here to the white house and also the president will be holding a press conference today, a chance for us to ask questions about the direction that these negotiations are going. >> we'll see how it goes. dan lothian, thanks so much. coming up in the next hour, some of the issues that divide the two sides. we're joined by steve israel of new york and republican congressman time price of georgia. hours after the final edition of the "news of the world" rolled off the presses stunning new charges against the tabloid. "the daily mirror" of london reporting staffers tried to hack into the phones of 9/11 victims. meanwhile, rupert murdoch arrived in london yesterday meeting with the chief executive of his newspaper divisions, rebekah brooks.

backing her insisting she didn't know what was happening at the time that hacking was taking place. the final edition of the paper was published yesterday. 5 million copies were printed, nearly twice the usual run. and the paper issued a full-page apology. dan rivers is live for us in london. good morning, dan. >> good morning. i want to get straight to my guest, martin lewis a lawyer, for milly dowler, the 13-year-old school girl who was murdered and then her phone was hacked into. this case kind of made this whole issue blow up massively. you've just had a meeting with the deputy prime minister. how did that go? >> it was a very constructive meeting. he seems to be on board. this was always dressed up about a story about celeb bri ts and sports people, but it's the victims of crimes, the victims' family and the dowler family in particular which has captured the public's imagination. >> and here, we're hearing, that 9/11 families may also similarly have had their phones hacked

into. >> we've been told that some of the english almost equivalent 9/11 families, people, they didn't stop listening in to people's phones. they were just heaping tragedy upon tragedy. >> and in terms of what happens next, i mean rupert murdoch has not app guysed for this to the family. >> there's been no letter of apology from murdoch. yesterday the "news of the world" newspaper ended after 168 years. it was an edition that said "aren't we good" saying sorry to the dowler family and sorry to all the other victims we've broken the law listening to. >> how far could it go, how many victims? >> i don't -- hacking but it seems to be getting bigger all the time. it's going to take more newspapers, probably more countries as well. >> there you go.

strong words after 6,000 victims, perhaps, been involved with this, including inevitably, some victims in the u.s. as well. this is not just a u.k. story now. it's really truly internationally. >> dan rivers, we'll continue to follow it. thank you so much. tensions growing now between the u.s. and pakistan in the wake of the raid on the bin laden compound. now the obama administration is withholding $800 million in military aid to pakistan. it's intended to pressure the country to crack down on insurgents there. pakistani officials are defiant insisting that they don't need the financial aid from the u.s. america's top military officer says that china has arrived as a bona fide world power. joint chiefs chairman admiral mike mullen on a visit to china, urged its leaders to use the power as a force for global good. meantime after meeting with mullen in beijing china's top general criticized the timing of american military exercises in the south china sea as, quote,

inappropriate. and the president's newly appointed defense secretary leon panetta is in baghdad this morning. it is his first trip to the war zones of afghanistan and iraq in his new role, panetta telling u.s. troops that iraq needs to crack down on insurgent groups that have been targeting american forces with weapons supplied by iran. cnn's kris lawrence is live at the pentagon with more. how was that received, chris? >> kiran, it had to be put diplomatically because the u.s. definitely secretary panetta put out a tough message saying the u.s. reserves the right to go after some of these militias on its own, that's because june was the worst month, the most dangerous and deadly month, for american troops in iraq in about two years. we haven't seen this sort of violence directed at american troops since about 2009. so, he is very concerned. the reason for the spike in violence is because american officials say you have weapons

that are being provided from iran coming over the border and giving these militias and these insurgents more fire power. secretary panetta made it clear that he wants the iraqis to do more to go after some of these groups. >> i would like for iraq to exert more of an effort to go after those that -- those extremists that are making use of these weapons, that if we are going to be partners they have a responsibility to be able to protect against that kind of tack occurring. >> reporter: why it's sensitive is because if the u.s. just takes unilateral missions in iraq, it could spark some sort of public backlash. in some ways they have to tread carefully. secretary panetta pushed the iraqis to make a decision on whether they want to ask u.s. troops to stay past december. it was interesting because his predecessor, secretary gates,

you know, was very, very open about saying look, we want to stay if the iraqis would ask us to stay, we would be willing to stay. we think it's a good idea. secretary panetta was a lot more reserved. he didn't really commit one way or the other but did say iraq has to make up its mind soon. kiran? >> all right. chris lawrence for us, thanks so much. the women's world cup quarter finals, one of the most riveting and thrilling matchups ever, kiran. >> it was. >> in a shoot-out, the u.s. stunned brazil. the score was tied, 2-2. both sides. then, the u.s. edged brazil 5-3 in penalty kicks and check out what has to be one of the most amazing goals ever. check this out. not that one. this one. >> towards. can you believe this! >> megan blasted it from 30 yards away and abby with the header into the back of the net. the u.s. advances to the semifinals which take place

against france on wednesday. >> speaking of france, tour de france known for its spectacular crashes, this one, though, is just bizarre. during the race's ninth stage yesterday, a car that was covering the event for french tv, sideswiped a rider sending him flying into another rider, one hit the pavement, the other soared off road right into a barbed wire fence. like true athletes they got back on their bikes and they finished the stage. the two cyclist were given the price for most combative riders. one of them did have to get 30 stitches and the team says it's unclear whether he'll be able to ride today. >> the guy who -- >> hit the barbed wire, i think so, yes. >> told you. didn't i tell you last hour. >> barbed wire hurts. >> you seemed to doubt me. >> i said did you have personal experience with barbed wire. >> some things you know. i don't -- i've seen barbed wire. feels like it hurts. >> you're right. >> going to be a tense show. yan ki's star derek jeter has joined one of the most exclusive clubs, 3,000 hit club.

were you bored by this too? >> we were standing four deep at the only tv at the pool. >> 28th player, only yankee to ever do it. the only person to ever do it in yankee stadium. old or new. >> also didn't he break a record having five hits in one game. >> it was a good game for him. jeter smashed the homer on saturday. the ball flew into the first row bleachers in left field. >> 3,000 hit was also a home run. i mean it wasn't just a random single. >> somebody got it. you know what he did? >> did the right thing. >> he did the right thing. life-long yankees fan christian lopez showed a lot of class, returned the historic ball. >> look at him. he had to duck. >> people tried to rip it out of his hands. >> yeah. got a standing ovation. didn't ask for a thing in return. the yankees did a nice thing back, gave him tickets in the luxury box for the rest of the season. >> pose with derek jeter. it's all good. >> good for him. coming up on "american morning," a heat wave that could be

stretching out to i think reynolds said about at least more than be a third of the country, said he was going to be looking at triple digits and feels hotter than that. no sign of it breaking any time soon. could be deadly. reynolds wolf has your forecast and tips as it gets hot out there today. also, a great day in space. an early wake-up call for the crew on the space shuttle "atlantis." the last space shuttle to ever go up. we're going to tell you what's on their agenda and how they woke up. from the red carpet to skid row, prince william and catherine the duke and duchess of cambridge, made the most of their quick visit to tinseltown. you're watching "american morning." it's nine minutes past the hour. ooo whatcha got there? uh oh, sesame stir fry from lucky dynasty. oh, me too! but mine's lean cuisine, so no preservatives. [ female announcer ] lean cuisine has 90 dishes with no preservatives and quality ingredients like farm-picked broccoli

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welcome back to "american morning." nasa is tracking space debris floating here the international space station and near space shuttle "atlantis" which is docked with it. right now they say there's no

immediate danger. this morning at exactly 3:02 eastern time the crew woke up to the sounds of "tub thumping." ♪ i'm thinking that is a great wakeup tune. "atlantis" crew members transferred equipment and supplies to the international space station. on sunday "atlantis" flawlessly docked by executing, check this move out, it is called a back flip. the shuttle rolls over so its underbelly is up. i don't know what up is in space but it's up. allows the crew members to check for any problems. at the space station the astronauts will research the potential for space refueling system and this mission, as you know, is the last one of the 30-year space shuttle program. are you satisfied that you got an answer to your question as to why they got up at 3:02 in the morning? >> yes. they get their eight hours of sleep. >> doesn't matter because they're in space. >> right. >> all right. that's the answer we're going with right now. >> i'm good with that. this is not the most comforting sight going for a

swim off the waters of cape cod. three great whites spotted there. officials are warning swimmers, this is the warning i don't get, we always get odd warnings. stay away from seals because they're a favorite snack for sharks. >> and you said what i was thinking, is, why would -- i don't know where the seals would be. >> why would i hang with seals in the first place. >> somebody used to tell me, i don't know if this is an old tale, don't act like a seal. flopping around, trying to kick on your boogie board you may look like a seal and then you would be more interesting to the shark. the sightings are attracting tourists. the local venders cashing in, stores offering plenty of shark-themed gifts and souvenirs and they haven't closed any beaches yet. >> easy enough to stay away from the beaches but it is hot in so many parties of the country right now. heat wave swepg through the central and plain states this week. temperatures reaching triple digits. 15 states are under heat advisories which means temperatures are expected to exceed 105 degrees.

the warnings in effect through tomorrow. officials suggest staying indoors as much as possible. 15 minutes past the hour. reynolds wolf following that for us. how long is it going to stay this hot? >> the next several days before we see it breaking in before we get closer to next weekend. next 72 hours or so it will be brutal in many places including spots like wichita, back into dive city, tulsa, joplin. the highs yesterday, record heat and joplin, in fact, got up to 106. the warmest it's been recorded there in the past 25 years. today, we expect the heat to basically be pretty much in the same spot, right in the nation's midsection. also beginning to merge into parts of the southeast. every place you see on this map shaded in the orange or the pink, that's where you have your watches, your advisories or warnings. heat indices when you have the temperature combined with the high humidity it's going to feel like it's anywhere from 100 to 115. little rock, 111 that's how it's going to feel today. st. louis, 112, 106 nashville. wrap things up, expect it to

continue into tuesday, 86 des moines, 109 memphis and even as we fast forward into wednesday, the intense heat in spots like little rock with 101, jackson, mississippi, 107 and 104 montgomery. a snapshot of the forecast. it will be brutal for the next several days. >> no kidding. reynolds we'll check in with you in a little while. >> another excuse not to work out as well. you would have. sans the head phones. >> i have a little workout outfit with a vest and all that. >> it's way too hot. >> too hot, can't use your ipod. >> a whirl wind weekend in california, for william and catherine. did everything from played polo to did some art projects. >> watching polo over the last few years it's a hard game. >> you have to be coordinated. >> very. >> do more than one thing well at once. >> once again, prince william showing some of his panash from the glamour of the red carpet they got to the grittier side of los angeles. the royal couple made the most of their quick visit checking out l.a.'s skid row.

cnn's max foster joins us live from los angeles with a wrap-up of their l.a. days. max? 4. >> yeah. like you say it was a whirl wind. it's exhausting following them. like to think what it's like making these events and showing up like they do. canada was a massive success. let's have a look at thou things went for them in california. >> reporter: after taking canada by storm, it was time to visit california. the duke and duchess invited some friends around to the consul general's house where they were staying. the next morning, it was off to santa barbara for a game of polo. the duke was, in his own words, looking forward to letting loose after a busy few days. his team won and a proud duchess presented her husband with a trophy and a kiss. on saturday night, they hit the red carpet. the duchess has arrived and hasn't disappointed. the dress by alexander mcqueen wowed the hollywood a-listers inside.

from the red carpet to skid row, on sunday the couple threw themselves into an art class with kids from this deprived neighborhood. the artistic duchess showing her skills. the last engagement was a war veterans job fair. >> this is the final stop on this very successful north american royal tour, but in many ways, this is the most important stop, particularly for the duke. >> this is the last event on our tour of north america, but in my mind it is one of the seriously most important. this is because it is about men and women who, of their own free will, choose to put their life on the line for their country. they are the front line of a remarkable relationship between the united kingdom, the united states and canada, which is safeguarded our freedoms for a century. >> reporter: the public would have liked to have gotten closer to the couple in america, but the trip has confirmed them as the biggest stars on the planet right now. and i've been speaking to saint

james palace asking about their plans and told basically they're going to disappear once they establish their married life, looking forward to going back to north wales where william is a search and rescue pilot and catherine will become a military wife. they're going to be very low profile. after the buzz of sort of media coverage not going to hear much more from them for a while. >> got to live on a base in barracks like other people? >> no. they've got a house, call it a cottage, not what you and i would call a cottage. >> their version of a cottage. >> but they don't have the staff yet. sorry? >> you were saying it was tough enough following them around on this world wind tour, but they really looked as if they were enjoying it. they didn't look stressed. >> looked completely at ease. >> yeah. when you speak to them, you get the sense from william, he knows it's going well and catherine wondering if it is going well. i think they're going to go back and realize it has gone incredibly well. it's been frustrating for the photographers because they're looking for the unguarded moments and there haven't been any whatsoever.

it's been fantastic for the couple. >> good for them. max foster, thanks so much. the unguarded moment would be, you know, kate looking at william going -- >> i know. they looked like they were enjoying it. having fun with people. >> that's right. coming up on "american morning," they look like casinos, sound like casinos and feel like casinos. they might be popping up in your local strip mall. i've never really understood the laws that govern this. >> the video gaming versus actually pulling the, you know, pulling the handle on a real slot machine. >> we're going to find out right after the break. [ male announcer ] now, more than ever,

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24 minutes after the hour. minding your business this morning. feelings of uncertainty running high on wall street.

following that dismal jobs report on friday. the dow, s&p and nasdaq all closed lower to end the week. all three are set to open sharply lower this morning as well. alcoa, america's largest aluminum producer, kicking off a full week of second quarter earnings on wall street. that report comes out after the closing bell this afternoon. google, jp morgan chase, yum brands, citigroup, all are releasing earnings this week. also this week, federal reserve chairman ben bernanke will face tough questions about the economy after that weak jobs report. the fed chief testifies before the white house financial services committee on wednesday. want a free credit score? get rejected for a loan. starting later this month lenders have to tell you which credit score prevented you from getting a loan or credit card. the measure goes into effect july 21st. "american morning" right back after the break. mine was earned over the south pacific in 1943. vietnam, 1967. i got mine in iraq, 2003. u.s.a.a. auto insurance is often handed down from generation to generation,

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let's take a look at new york city this morning. 7:27 right now. in the big apple where it's clear and 74, but a little bit later today it's going to be partly cloudy going up to 89. that's going to feel like a cool spot compared to many parts of the country. >> these casinos, are they in a strip mall near you? so-called sweepstakes cafes are popping up in nearly a dozen states. >> they offer games that look like -- look like slot machines and shops have a casino feel in them. now a lot of legal questions and controversies as well.

poppy harlow looked into this for us. welcome, poppy. >> it is so interesting how they are operating in this gray area, really on the edge of the law. there have been police raids, arrests and felony charges in these sweet stakes cafes that are right next to a dry cleaner or the local massage parlor. take a look, we went down to florida to find out more about these, popping up all over the place and they have the sheriff up in arms. take a look. . >> reporter: welcome to florida? this isn't the vegas strip. it's a strip mall. between barber shops and massage parlors, so-called sweepstakes cafes are popping up across the country. they've got the markings of a casino, free food, dark rooms, some open 24 hours. does it feel like gambling to you a little bit? >> yes, that's what i like about it. >> reporter: but are they casinos? law enforcement thinks so and they're shutting them down

because here in florida, only certain highly regulated operators are allowed to run casinos. >> in our opinion it's clearly gambling. >> reporter: owners say that's not the case. >> it looks like a duck, talks like a duck, walks like a duck, but it's not a duck. sweepstakes is a predetermined pool of tickets. it's totally different. >> reporter: in every one you'll find a sign like this. to give you a sense of how many of these sweepstakes cafes there are, you have one right here, two across the streets. they would not let us in, would not talk to us. around the corner another. here's how they work. you buy a phone card or internet time and get free sweepstakes points in return. log on and play away. unlike a slot machine where you pay just to pay, sweepstakes players are actually getting a product for their money. which owners say makes this legal. but you can still lose money just like in a slot machine. >> i ended up losing 15 bucks.

>> reporter: doc victor runs world touch gaming and sells these terminals for $1500 a pop. >> get a fraction of a penny per entry revealed. >> reporter: making it a lucrative business for software developers and store owners who can bank up to $40,000 a day. >> it actually says that the total prizes over the next thousand entries will total $39.55. >> reporter: that's predetermination, which would make this legal. but as we found, not every place operates that way and now many are getting raided by cops. florida state representative peter nare actually opened a sweepstakes cafe, only to have it shut down two months later. >> it's not a gambling operation. it is a retail business who uses sweepstakes to promote their business. >> reporter: but sheriff coats isn't buying it and ordering them shut left and right. what games do you like to play? >> the winning one. just to give you a sense, it was nearly impossible to get into

one of these sweepstakes cafes as journalists. i was not exaggerating here, ali, chased out of one of these cafes. didn't want anything to do with us. and one elderly gentleman said don't let them take these away from us. we love them. bottom line is you're paying for a product, using that knowing they're all going just to play the games and the issue of predetermination, not paying to play the game, paying for a product and it's a gray area of the law. >> what an interesting distinctionion. you're going in, you could win something. >> they look just like -- >> clearly have gone around it so it's not technically. >> still getting shut down left and right. the florida representative, a law maker who opened one, his was shut down and two weeks later a new sweepstakes cafe popped up in the same shop as his was shut down. >> gives me a little more to

think about. i see these things popping up and don't know what they're about. good to see you. >> all right. top stories, stunning allegations against the now defunct british tabloid "news of the world." "the daily mirror of london" reporting the paper once tried to hack into the phones of 9/11 victims. the final edition was published yesterday with the "news of the world" printing a full page apology for the hacking tactics that got them shut down. nasa tracking space debris near the international space station and space shuttle "atlantis." nasa is saying it is not a threat and no adjustments will be needed. the debris is the wreckage of a 1970 satellite. the closest approach could happen tomorrow. the midwest and southern plains in the grips of a smothering heat wave that is not letting up. look at the 15 states that are facing heat advisories today. meaning the temperatures could top 105 degrees. cities in four states, missouri, oklahoma, tennessee, and indiana, could see the heat

index top out at 115 degrees. stay safe and stay hydrated today. nine days and counting, that is the deadline set by president obama to get an agreement on raising the debt ceiling or risks default. congressional leaders will meet with the president again today. they met yesterday. they have all week if they have top there was not a lot of progress made at yesterday's whus session. the issues dividing the two sides is new york congressman sieve israel. welcome. great to see you this morning, congressman. looks like they're still pretty far apart. looked like there was confusion on whether there was an agreement on the basic amount of cuts that they were going to try to get, $2.4 million bandied about and chris van hol len, one of your colleagues said there's no way we're near $2.5 trillion, more like $1 trillion. where does this stand? >> we unfortunately remain far apart because every time we get close the republicans move the goal posts further to the right, further to the far right.

look, the recent past does not inspire confidence we will be able to wrap this up. at the beginning of his speakership republican john boehner was asked, what are you going to do about the debt ceiling. he said we need an adult moment. since then, eric cantor the number two republican leader walked out on the talks. two days ago john boehner said i'm not going to participate in talks if it means that we're going to have to close corporate tax loopholes. that is not acting like an adult. that is partisan game playing and the american people and our economy cannot afford that kind of partisan game playing. >> he was there yesterday, seated next to the president. it seems there still is a real division among conservatives in the gop who say no, nothing, that looks like a tax increase and from the liberal wing of your party saying nothing that looks like we're cutting into entitlement reform in any way, shape, or form. how do you resolve that? >> we have said consistently that we should do what every small business in america does when faced with a deficit. tighten your belts, reduce spending. we're willing to do that.

increase revenue by closing tax loopholes, rethinking the $4 billion in subsidies we give the richest oil companies on earth every year and engaging in common sense tax reform. those are the things you need to do. we will not negotiate the end of medicare and we will not negotiate the end of medicaid when republicans want to end it to fund more tax loopholes and oil subsidies to rich oil companies. >> even the president says that this -- he's going for a big, big thing, a $4 trillion package that would include, he says, some changes to medicare and social security, not ending medicare but some changes, and then speaker pelosi saying any deal has to protect the entitlement programs and secretary geithner the treasury secretary saying maybe some of these can be responsibly cut. doesn't seem there's agreement within the democratic party on how this should be handled. >> there is absolute unity within the democratic party. >> how is that unity? we have to cut entitlements and

others say they can't be touched. >> no one is talking about cutting entitlement. no democrat talking about cutting medicare, asking seniors to pay more. we're willing to negotiate reforming medicare, strengthening medicare, improving medicare. we will not negotiate the ryan plan that ends medicare. we will not negotiate the privatization of social security. >> when it comes to security though, there are changes that would i guess be considered by some to be cuts and others to be reforms. but one of them is upping the retirement age. the retirement age established to be 65 when the life expectancy was 63. which obviously is different if you're going by today's standards you have to work until you were 75. also some changes in how it's calculated. these are all still recommendations of the bowles commission, the simpson bowles commission. is that something democrats are on board with? >> i don't think it's fair to ask a heavy equipment operator to continue working on the job until he's 75 years old. >> exceptions for people who work in manual labor. >> we want a deal that is fair

to the middle class, that strengthens the middle class, doesn't ask seniors to bear the sacrifice. republicans have given us every day to the point where they're walking away from us when we tell them we're not willing to do that is, more corporate tax loopholes, subsidies to big oil companies. some people who want to grand bargain, some people who want to baby bargain, we want a fair bargain. i'm hopeful. >> the flip side, republicans will say, by refusing to touch entitlement programs we're never going to get anything, never going to be able to reduce the deficit and also that this is a tough time, business environment with 9.2% unemployment to raise taxes on anyone. >> first of all the republicans haven't talked about reducing entitlement programs, they have talked about ending medicare. there's a difference between make something reforms and simply saying to seniors you're going to pay an extra $6200 because we're going to privatize it give you a voucher and you're on your own. huge difference between the two. if the republicans would act responsibly as john boehner promised and talk to us about

how you're going to eliminate some of the corporate tax holes we'll listen. it is unfair to say seniors you bear the burden, middle class you bear the burden and we will protect the corporate tax loopholes every day. >> great to get your perspective. steve israel from new york. now we'll hear the other side. >> what's it going to take to get republicans and democrats on the sage page when it comes to deficit and debt ceiling. here to give us the gop perspective, congressman tom price of georgia, member of the house weighs and means committee, joins us live from atlanta. good to see you again. thank you for joining us. >> thank you. >> what is your sense, what have you heard about where these discussions are? didn't seem to be an awfully productive weekend. they're going back at it today. it does seem, though, when republicans and democrats go into these meetings, there's not a lot of movement. >> well, they're going to meet again today at the white house, as you mentioned and clearly we've got to move forward on this. >> yep. >> and what we believe strongly is that no tax increase is ever

created a job. ultimately this is about job creation. we've got to do short-term things, decrease spending in the short-term, mid term things, spending cap so the government doesn't continue to increase its size and hopefully long-term fundamental reform which for many of us means a balanced budget amendment. >> okay. senate minority leader mitch mcconnell said i'm, quote,ing him, noubts is talking about not raising the debt ceiling. he has a plan to reveal later this week if needed. do you agree nobody is talking about not raising the debt ceiling? >> with the demographic changes in our society, 10,000 individuals reaching retirement age every day they dictate that the debt ceiling has to be increased. the question is, we're not going to -- we're not going to agree to increase it without any fundamental changes so we decrease the spending of the federal level. that's what the president wanted initially. remember he wanted a clean debt ceiling increase. we said no. the house said no as a matter of fact. what we need are the fundamental

changes so we get our budget in balance and able to pay off the debt. it's only through those kind of fundamental reforms will we result in job creation in the private sector. >> and i know you believe it which is why you signed it, you signed the grover norquist pledge, the pledge from americans for tax reform, saying you would oppose any and all efforts to increase the marginal income tax rates on individuals and businesses and oppose any net reduction or elimination of deductions in credit unless matched dollar for dollar. you believe that, but do these kinds of things come in the way of negotiation that might have other components to it that you might find unacceptable? >> i don't think so, because i think what the american people appreciate is that you don't reinvigorate the economy raising taxes. we're not in those boat because america taxes too little. we're in this boat because america spends too much. that's why we've got to concentrate on decreasing spending at the federal level, putting a cap on it and in place those fundamental reforms. >> i'll ask you, representative

price, while i understand that you fall into the camp of people who believe economically lower tax cuts will create or tax cuts will ultimately create more jobs, these job numbers that came out on friday were very disappointing across the board. >> sure. >> there is some danger, some danger that if you impose big spending cuts -- the private sector gained 57,000 jobs in june, public sector lost 39,000 for a net gain of 18,000 jobs, probably less than 10% of what we really need, representative price, the danger is, cuts coming immediately could hurt. does it give you pause when you say, see numbers like that, to say immediate further job -- government spending cuts could hurt more than they help? >> i tell you, ali, we somehow think that we don't know how to create jobs in this country. >> right. >> we know how to create jobs in this country, to provide certainty to the private sector where the job creation occurs and it's to get the government out of the way so that you don't have this regulatory oppression that's occurring.

>> i'm not sure, i certainly talk to a lot of ceos and businesses, those are not two reasons that people cite for not creating jobs. the reason most cite for not creating jobs, i think you know the answer to this. >> uncertainty in the market. >> into no. lack of demand. if people want to buy things companies will hire them and build them. >> you create jobs so individuals have disposable income. >> good argument but you and your colleagues continue to say it is uncertainty in government regulation. >> sure it is. >> when in fact -- i haven't seen a study that bears that out. i haven't seen somebody saying it's uncertainly and government regular glation. if there were buyers businesses would hire people. >> take your microphone out to the streets of america and ask the businesses out there why they're not expanding and creating jobs. it's because they don't know what their taxes are going to be, they don't know what the result of the obama care, the health care reform is going to be, they don't know what their energy costs are going to be. all these things result in -- >> what about those hiring? we've seen a number of companies hiring? they're over it?

they don't mind that there are going to be -- uncertainty in tax ago and health care, hiring because people are buying their stuff. you can't disagree. somebody is buying your stuff and you need more of it built and produced and sold you'll hire people, right? >> absolutely. 18,000 jobs produced last month, 29 straight months of unemployment above 8%, under this administration. longest time since the great depression. we need to get back to the private sector creating jobs, not the public sector creating jobs. the way to do that decrease spending, certainty in the market. >> the only jobs created in this country have been from the public sector. jobs lost in the private sector every month. >> i'm sorry? >> the only jobs that have been created in the last year have been in the private sector. we've seen jobs lost in the public sector every month. >> that's after a huge increase in the public sector over a period of time. this is the choice, ali. here's the president's plan. that -- the increase in debt is the red line right there. >> right. >> the green line is ours which brings us into balance which decreases the deficit and brings

us into ability to pay off the debt. that's the way we create jobs in this country is to decrease the reach of the federal government, no tax increase ever created a job. >> representative tom price, thanks very much for joining me today. >> thanks ali. >> representative price of georgia, a member of the house weighs and means committee and a member of the house tea party caucus. >> it gives you an example. those two discussions about how far apart they are. >> right. these are two men who believe what they believe. >> right. >> and believe they've got a direction and they're not in the same place. >> and believe that's what their constituents want from them. >> yep. >> president obama is going to be addressing the nation about the debt ceiling and deficit reduction at 11:00 a.m. eastern. see it live here on cnn. >> up next, she you was kidnapped at 11, held captive for 18 years, now jaycee dugard is speaking publicly for the first time. how did she keep it together, all of those years? 45 minutes past the hour.

. jaycee dugard who spent 18 years in the clutches of a sex offender is speaking publicly for the first time about the

ordeal. dugard was 11 when she was kidnapped by philip garrido in 1991. >> she gave birth to two of his children. in an interview with abc's diane sawyer, dugard tried to describe the near two decades of terror. >> there was not a day that i didn't cry. i felt like there would never ever be a day i wouldn't cry again. and then after a while, i told myself i can't cry anymore. >> what's the most haunting memory? that lock. carrying the lock. i know i said that earlier, but for some reason, that and the bed, squeaky bed. squeaky pullout bed. the noise, the sounds. it's weird what sticks in your head. sounds. >> how did you stay sane? >> i don't know.

i was still alive. i was still -- there was still hope. still hope. >> i'm trying to imagine how you are coping? i'm trying to imagine -- >> i don't know. i can't imagine being beaten to death, you know. but -- you can't imagine being kidnapped and raped. you know. it's just -- you just do what you have to do. to survive. >> she certainly did. she was able to raise her two children. i mean she gave birth the first time when she was just 14 years old and made it through until she was finally discovered and told people who she was. she's written a book, 31 years old, called "a stolen life" and it's being released tomorrow. >> wow. morning headlines are next. it is 49 minutes after the hour.

51 minutes past the hour right now. here is a look at your headlines. british ta be lloyd news of the world forever silenced. now a former competitor, "the daily mirror" is accusing the paper of once trying to hack the phones of 9/11 victims. leon panetta in baghdad this morning for talks with iraqi leaders. on a trip to afghanistan over the weekend, panetta committed

his first gaffe, saying 17,000 troops would remain in afghanistan until 2014. the white house is in record saying the number would be far less on the turnover date. trying to cut a deal on the debt ceiling and deficit reduction. they met for over an hour last night at the white house. the president says an agreement has to be hammered out within nine days in order to keep america from defaulting on its debt. nasdaq, dow, s&p 500 headed for a lower opening this morning, following that dismal jobs report out on friday. midwest in the grips of a suffocating heat wave. 15 states facing heat advisories today. that means temperatures could top 105 degrees. cities in four states, missouri, oklahoma, tennessee and indiana could see the heat index top out at 115 degrees. a 22-year-old singer and aspiring actor charged with

burglarizing the famed ed sullivan theater. it's where the late show with dave letterman is taped. james whit moamore, police say, appeared to be intoxicated when he broke in one of the glass doors and then trashed the building's lobby. we're expecting some kind of announcement from tiger woods on the golf channel at 11:00 am eastern. he just announced that injuries would keep him from playing in the third major this week, the british open. now you're caught up on the morning's headlines.

beautiful atlanta, georgia,

fair and 76 right now. it will be partly cloudy and 95. >> it's just not so great, but not terribly bad. >> all right. fair. >> it's fair. that's fair. smoking can be hazardous to your pocketbook. now, companies are penalizing employees who smoke. they want them to pay higher insurance premiums than those who are nonsmoking. >> is it fair to ask those who smoke to pay more? on facebook, adonis says we should treat smoking as a legal addiction and give the smoker the ops to seek treatment through their insurance policy. it would be a win/win situation for all parties involved. then if they do not seek treatment, the question is fair game. and andrew says no, it would be fair if all lifestyle choices are accounted for and charged accordingly. how about everyone paying for sports injuries, obesity,

sedentariness? the list can go on and on until most everyone is included. what health care providers charge needs to be regulated like a utility. >> potential sports injuries. i have three good reasons not to workout. >> too hot, can't wear your ear phones and now you could potentially hurt yourself. it's now 56 minutes after the hour. members of the american postal worker's union handle more than 165 billion letters and packages a year. that's about 34 million pounds of mail every day.

ever wonder what this costs you as a taxpayer? millions? tens of millions? hundreds of millions? not a single cent. the united states postal service doesn't run on your tax dollars. it's funded solely by stamps and postage. brought to you by the men and women of the american postal worker's union.

good morning. i'm kiran chetry. news of the world publishing its final edition yesterday, but the scandal even more shocking today. can an agreement be hammered out within nine days? it may be too late to stop america from defaulting on its loan. republicans and democrats are heading back to the negotiating table on this "american morning." and good morning to you. thanks so much for being with us on this monday, july 11th. kiran chetry, ali velshi.

christine romans is taking some time off. >> she is. more stunning allegations against the tabloid. "the daily mirror" says that the now defunct newspaper tried to hack into the phones of 9/11 victims. >> what are you finding out about this latest outrage, dan? >> reporter: well, this is, as you say, coming from a rival tabloid "the daily mirror." they are saying that "the news of the world" supposedly contacted a former new york prelimina policeman to ask him for numbers of families of those killed in 9/11, presumably with a view to hacking in. we don't know whether they were successful or not. that former policeman supposedly did not hand the numbers over. we don't know whether the hacking was successful, but it appears they attempted to, if this account is to be believed. and that fits in with the bigger picture here of pretty much anyone you can imagine being

hacked into, be it murder victim's families, families of fallen soldiers in afghanistan, the families of terrorist attacks here in london. it is quite breathtaking. the newspaper itself, of course, now has been shut down. but this political fire storm around these allegations continues to get bigger and bigger. let's have a listen to the solicitor who represents the 13-year-old schoolgirl who was murdered and whose phone was hacked into. here is what mark lewis said. >> their position is that they have said that she shouldn't -- that she should take responsibly and do the honorable thing and resign. >> reporter: talking about rebecca brooks, the chief executive, who remains in her job. she is a close friend of the british prime minister, david cameron, which makes this all the more political and awkward here. there is also a lot of controversy surrounding the parent company, "news corp.,"

which wants to take over the sky broadcaster, a lot of people saying that deal should be off. that's going to be debated in the parliament behind me in two days' time. >> dan, thank you very much for that. you, last week, were talking about the effect this is having on the company. "news of the world" is a smaller company, it's these larger publications that -- >> right, that they were hoping to acquire. u.s. and pakistan relations going from bad to worse after it was announced that -- the u.s. said we are going to withhold $800 million in military aid. pakistan issued a defiant response, saying, in effect, you can keep your money. we don't need it. >> more on that. and a busy weekend for you. fighter jets in the skies above camp david, maryland. norad had to scramble jets three times over the weekend to divert planes that had wandered into

restricted air space. it is expanded when president obama is at camp david. >> trying to hammer out a deal to raise the debt ceiling. they met last night with the president and did not accomplish a lot. the white house insists that an agreement needs to be reached within nine days or america could default on its debts next month. tim geithner warning that we have reached the critical stage. >> well, this is hard. it's politically very hard. it's a grave moment for the country. we need to do something very big, very substantial to bring our long-term deficits down over time. we need to do that so it's good for the economy and it's going to require both sides to compromise. >> joining us live from washington this morning to discuss the issues that divide the two sides, former white house deputy press secretary. congressman israel as well as

congressman price, it's clear that both sides are very far apart. at the same time, we hear the president saying or indicating he wants to push for something big, maybe to the tune of $4 trillion in some sort of package. jennifer, any chance he can get it? >> it does seem -- i think they're right to continue to push for a bigger package. they did succeed last week in changing the debate. before this debate about passing the debt limit was who was serious about spending cuts. now they've managed to change the debate into which side is more serious about deficit reduction. i think the president has proven he's more serious than the house republicans. that still doesn't get him a deal. in the end we may have a smaller deal more along the lines of $2 trillion, which is where it seems we were going to end up a couple of weeks ago and then this overall fight of deficit reduction will take place in the 2012 presidential debate. >> tax increases, they say, are off the table. say smaller deal, maybe $2

trillion. 230 members of congress signing on to this pledge not to raise taxes. it's put republican leadership in almost an impossible situation to come to any agreement. >> first of all, i do think there will be an agreement. when we talk about a substantial change, the republicans can take a great amount of credit for the fact that just a few weeks ago, the white house and democrats, throughout this nation, were talking about a clean debt limit. now everyone agrees that we need to make some very important reforms as we raise the debt limit in terms of spending so that this isn't just a habit we get into and it's so easy to do. with regard to the tax increases, whether they signed it or didn't is almost a moot point. we look at and wake up last week and find that our unemployment numbers and job numbers are are so devastating that even the democrats agree that raising income tax on those people that we hope will recracreate jobs i the thing to do. there will be an increase in the debt limit at some point, there will be a small package. history is depending on them to

do the right thing, both sides know. as we kick the can down the road a little bit, as we have done successfully, with the cr, but with great results, you're going to see there will be some historic changes. >> jennifer, the other issue seems to be entitlements, at least as it relates to democrats. the president saying that perhaps there will be some recalculations of social security benefits, perhaps some changes there. others like nancy pelosi and we just heard from congressman israel as well -- >> right. >> -- say they're not going to do that at all. democrats don't seem to be on the same page either. >> when you had the president last week suggest we should do a $4 trillion package, entitlement reforms were on the table. if you're talking about a $2 trillion package to suggest that that should be made up of social security and medicare cuts and without doing any sort of revenue increases, i think, is not going to be sellable to the house democrats, senate democrats or even a lot of republicans. what the president did indicate

is that, you know, he preferred we could do this now or in 2013 but that he's willing to do a lot of compromise, but not at the sake of so many spending cuts that we hurt the economy -- excuse me, the recovery fledg fledgling as it is. >> the unemployment rate went up 9.2%. does that give republicans a little more bargaining power than the president? >> absolutely no doubt. as americans, we need to do this, make important reforms and we need to increase the debt limit. for the president of the united states, this is important to his re-election. he needs to do this. he needs to show his leadership. it's one thing -- we're grateful he finally said instead of a clean debt limit, when it was even tried on the house floor, it was voted no. now democrats are coming to the table, saying we need to start talking about important reforms. as the president of the united states it's such a dire and desperate economic time.

you need to not just stand up and say i want $4 trillion in cuts you need to tell us how to get there and how you're going to make the big sell to your party. that's just not happening at this point. >> if we stall, keep moving the goal post, the quote from congressman israel, that it helps politically for the gop? >> i think it's crazy that o th that it helps them politically. the president comes out looking like a leader, somebody who is willing to compromise. you see a lot of republican political consultants, republican publications coming out, saying this is crazy for them to walkway from a deal which is three cuts, $3 cut in spending for every dollar raised in new taxes. and i think that they've exposed themselves as not really caring about the outcome. they just want to put the president in an uncomfortable situation. that he going to hurt them, let alone the damage it's doing to the economy.

>> the president of the united states is also, by fact, the leader of the democratic party. where is he coming, telling us where we're going to be in entitlement reforms, changing the tax code? if you can't unite your own political party as cheerleader in chief for the -- >> this would happen if the house -- boehner is the one who walked away. there's no indication that democrats weren't prepared to do this. >> of course there is. >> democrats in the house are saying they wouldn't do it. >> no changes, no changes to entitlement. so, i mean, there are factions in which both parties are finding it difficult to try to work around as they try to get a deal with the other party. >> right. >> we'll have to see. >> which is why it always happens at the very last minute, which is what i think will happen again this week. >> jennifer palmieri and susan molinari, great to see you both. you can see it right here live,

president obama at 11:00 am eastern. boost your morale at the office. i'm not sure you should do this. chk out what a bunch of employees at a computer company did. they blew up their boss' car. we have the explosion on tape. we'll tell you why they did it. space junk on a course to buzz "atlantis" and the spags station. whether ground control is planning any moves to avoid it. >> we'll talk about that. a little later, compton high school basketball star wins a free-throw contest, then gives his $40,000 prize to the runners up. why did he do that? we'll ask him live when he comes up. it's ten minutes after the hour. on our car insurance. great! at progressive, you can compare rates side by side, so you get the same coverage, often for less. wow! that is huge! [ disco playing ] and this is to remind you that you could save hundreds!

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nasa is tracking -- as if they don't have enough to do, right, with this final shuttle mission. they're tracking the international space station and shuttle "atlantis" and the space

debris that's coming a little too close for comfort. nasa is saying it's not a threat. it will breeze right by. the debris is from wreckage from a 1970s era satellite. they say the point of closest approach could happen tomorrow. >> this, by the way, is the shuttle doing a neat little backflip in order to dock with the international space station. this isn't the most comforting sight. great white shark spotted in the waters of cape cod. officials are warning swimmers to stay away from seals but kiran doesn't think it's an all-together helpful warning. >> what, would you be hanging out with a whole little pod of seals there? i think you should try to stay away from the sharks. >> that might be clearing. >> sightings, however, are tracting touritract i attracting tourists.

stay away, kiran. stay away. 15 states are facing heat advisories again today. that means temperatures could top 105 degrees. cities in four states, missouri, oklahoma, tennessee and indiana could see the heat index, it feels like, temperature top out at 115 degrees. reynolds wolf is in the extreme "weather center." this is extreme, reynold. >> yeah. this is this is this is rediculous. by late this afternoon, it will be sweltering. we have heat indices up. combined with the high humidity, it is going to be sweltering for a lot of people. more specific numbers for you are as follows. 103 in oklahoma city by this afternoon is how it will feel, 103 in dallas, 111 in little rock. that's just today. fast forward into tomorrow. the heat doesn't really drop a

bit. in fact, it intensifies a few places. 110 in montgomery, 110 in columbia. 104 in oklahoma city. wednesday, by midweek, cooler places like chicago and detroit. when you get farther south, little rock and still in montgomery and atlanta, it will be just sweltering. we don't expect this to change any time in the near future. it will basically be the same. what's going to happen today is the heat but also some delays. take a lock at these. major delays in chicago, and detroit due to the thunderstorms. tampa and miami, afternoon thunder bmoomers. delays in the midwest, thunderstorms. that will continue into the afternoon. right along this frontal boundary. could see some scattered storms in the four corners as we wrap it up. expect some afternoon thunderstorms in parts of the southeast, which could knock down those high temperatures some 10 to 15 degrees.

back to you guys. >> do you know anything about the whole seals situation with the sharks? >> why you should stay away from the seals to not get eaten by the sharks. >> seals are like a giant big mac to these hungry sharks. you don't want to look like a moving buffet line. if you're in iowa, sure, you'll deal with the heat but not too many great white sharks. >> one less thing to worry about. tiger woods is expected to make some kind of statement at 11:00 this morning, eastern, when the world's number one golfer will appear on the golf channel. he has already announced that he will be withdrawing from the british open because of injuries. would you like to speculate? >> reporter: no, i would not lick to speculate. how about you? >> i thought i would get you on that. >> nope. arguably one of the most

thrilling -- >> in soccer, soccer. >> yes. u.s. stunned brazil. ali has turned around and completely facing -- you're officially pouting on the set. the score is tied 2-2. u.s. edged brazil. check out what happens to be one of the most amazing goals ever. >> and it's in. >> score! >> blasted it from 30 yards away and abby wombak with the header into the back of the net. they advance now to the semi finals and play france. >> baseball game, yankees game yesterday, they were playing this on the big screen. yesterday was supposed to be the day we were all going -- >> huge day. >> saturday when we actually got it. >> so you guys were hedging your bets. jeter's not going to break 3,000

on saturday. >> he had five hits on saturday. >> i know. it was an amazing game. tour de france, known for spectacular crashes. check this one out. that car bumps the rider, who bumps another guy. we'll show it to you in slow motion again. sends another guy into the fence which, by the way, happens to be barbed wire. the car was covering the event for french tv. the first guy hit the pavement. the second guy went into the barbed wire fence. like true athletes, they got back on their bikes and finished the race. >> yes, they did. one of them needed 30 stitches on his left thigh after that. >> they were awarded a prize for being the most combative riders. another reason i'm not engaging in athletic activity this week. look at the danger. poor guy was out riding a bike and now has 30 stitches. >> i know. just because why your not training for the tour de france doesn't mean you couldn't kick out ten minutes on an elipticcal. that's pretty safe.

got to start somewhere. >>y feel like the right week to start exercising. >> shaquille o'neal will join our corporate company, tnt. tnt has not confirmed it yet. as you may remember, o'neill announced his retirement last month. provo, utah, a company found ways to boost worker morale. they blew up the boss' car. >> are you ready? >> guys, you need a soda. >> three, two, one! >> yeah. >> wow, that did not look safe. did you see those projectiles shooting out of the side? >> i sort of assume when you blow up a car, stuff goes up. employees and their families were invited to watch the explosion, eat hot dogs and celebrate a job well done. this is our story of the day that has more questions than

answers. apparently i did hear it was sort of an old teal car that the boss didn't really need. >> that he needed to set aflame. >> they probably made everybody sign waivers before they attended that thing. business headlines up next, including a check of the marks and j.k. rowling working on more harry potter books?

24 minutes after the hour. minding your business this morning. alcoa kicks off a week of second earnings. they will report their earnings after closing bell this afternoon. all of them are releasing earnings this week. the dow, nasdaq and s&p 500 are all set to open lower this morning after that dismal jobs report out on friday and concerns about the continuing debt crisis in europe.

after two months of declines, the new lundberg survey says any more drops are unlikely. current average gallon of gas is $3.62. if you smoke, there's a good chance your employer will want you to pay more for health insurance than your nonsmoking co-workers. more companies are doing it it. is it fair to ask employees who smoke to pay more for health insurance? we'll read through some of your responses later in the show. the new "transformers" movie is doing well at the box office again. the movie raked in about $47 million this weekend and $262 million in just two weeks. already the highest grossing film of the year. harry potter author j.k. rowling keeping fans on the edge of their seats at the premiere of "the deathly hallo with. s:part two." she is not planning another book but she says never say never.

compton high school basketball star wins a free-throw contest, then gives his $40,000 prize away to his opponents. we'll speak to him live, next. "american morning" is back after the break. they're two of a kind. and, just like toddlers, puppies need food made for them. that's why there's purina puppy chow...

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welcome back. it started out as a simple free-throw contest, vying for

$40,000 in college scholarship money. young man named alan goy won the event. then he found out he won a full scholarship separately. what did he do? he gave the cash away to seven other finalists, to help them pay for their college educations. the organizer of the free-throw scholarship contest, one of the writers of the movie "old school." welcome to both of you. alan, let start with you. this wasn't a contest for basketball players but people with a 3.0 gpa. you got in by luck of the draw. you're a pretty good basketball player, a bit of a ringer? >> yes, i know it was -- it was a surprise to me that they pick mied na ed my name from the hat. >> but it was legitimate. you had those grades. that's why you got in. did you go in there, thinking i'm going to win this?

>> no, i did not, because at first i was -- i was kind of sha shaky about getting in the competition because about -- i figure it wasn't right for me to just join in, because i was already a basketball player. i knew a lot of people was going to say it wasn't fair. >> so you have this full scholarship elsewhere. you now win this $40,000 scholarship. what happened then? how did you decide you were going to give this money away and how did you go about telling the other kids? >> i talked it over with my family, my mom, my father and also my coach. and we just decided -- i decided to tell them that it was the right thing to do, you know, give it away, because i also have a full athletic scholarship to go play basketball. i figure why not just help the others? my education is already paid for. i would like to help the others. so, i ended up telling court about it. and court felt like that was the best thing for me to do.

he was excited about that. and the day of our graduation, we filmed it. and i huddled everybody together and i told them about it and everybody was excited. >> i should mention that under ncaa rules, you were entitled to keep that money. court crandall, what did you think when allan told you he was giving this money away? >> it was funny. if he had told me that at the start of the competition, i would have been stunned but by the end i wasn't actually surprised. i said to someone the other day that i raised my children in manhattan beach but i actually went to compton to find their role models and actually believe that allan and donald and omar and all these kids are such incredible role models and wonderful representatives, not just of their community but kind of our country at large. >> and what's your role in this? you're shooting a documentary, for what? >> for the sake of shooting a documentary. we wanted to make a film about -- kind of showing another

side of compton. and, really, the whole basketball thing was intended to just be a metaphor. i think there's a lot of lines that separate people in the world these days, whether it's financial or race or religion. and this was supposed to be a line that drew everyone together, which was the free-throw line at compton high school. >> you did some additional fund-raising that day. how does this all work out for everybody? >> i believe they will get about $5,000 a piece, something like that. >> right. and is that plus their tuition? i guess they get their tuition and then they get this money? so what's the reaction been? >> everybody was excited when i decided to give it up. everybody was just commending me and telling me what i did was a

great thing. but i figure, you know, it was the right thing to do. so, it was a no brainer for me. >> that's the best part. when it's a no brainer, it's the right thing to do and it's a great thing. that combination doesn't come across very often in life. congratulations, allan guei, star basketball in compton and court crandall. >> nice stuff to hear when somebody does something like that. report now accusing the british tabloid "news of the world" trying to hack into 9/11 victims' phones. the paper published its final edition yesterday in the growing wake of the scandal. nasa is now saying space debris is not a threat and no adjustments will be needed to avoid the space junk. they say the debris is wreckage from a 1970s satellite. debt talks resume today.

both sides say they'll go round the clock to get the deal done. yesterday the president met with white house top congressional leaders at the white house and when it was over, still no agreement. the president warning we have nine days only to agree on raising the debt ceiling or we risk default. tensions between the united states and pakistan continue to grow in the wake of the raid on bin laden's compound. now they're withholding $800 in aid to pakistan. >> and pakistanis are responding, saying, keep your money. joining us live from islamabad, reza sayah. >> reporter: good morning. another setback. this one is a significant setback. initially, washington is -- essentially, washington is sending a message to pakistan. we're not satisfied with the efforts that you're making in the fight against militants. if you want to continue to get our money, to get our resources,

to get our help, there has to be some changes on your part. in previous years from washington, we've heard a lot of rhetoric, a lot of accusations coming from u.s. officials. but this move by washington can certainly have the potential of substantially changing the complexion of this relationship. pakistan, for its part, has essentially shrugged off this move by washington, telling washington that we don't need your money. you can keep it. we talked to the spokesperson for the military and he claims many of the operations launched by the pakistani military against militants in pakistan are already done without u.s. help and u.s. funding and he claims those will continue. that doesn't square with previous demands made by the pakistani government, pakistani military, demands from the u.s. to give them morme money, more resources to precisely fight militants. you see a little bit of

gamesmanship and defiance of the pakistani military. >> reza sayah for us live in islamabad. thank you very much. after one of the largest cheating scandals in school history, parents are reeling. what went wrong in atlanta? our education contributor steve perry will be joining us in a moment. it's 37 minutes past the hour. hey can i play with the toys ? sure, but let me get a little information first. for broccoli, say one. for toys, say two. toys ! the system can't process your response at this time. what ? please call back between 8 and 5 central standard time. he's in control. goodbye. even kids know it's wrong to give someone the run around. at ally bank you never have to deal with an endless automated system. you can talk to a real person 24/7. it's just the right thing to do.

40 minutes past the hour. partly cloudy, 79 degrees. going up to a high of 95 later in the day. they're also dealing with a major scandal, uncovered in atlanta's school district. the georgia governor's office, to doctor test answers, to boost the standardized test scores. some kid whose really flunked ended up passing and missing out on the chance to actually get the extra help they clearly needed. to talk more about what this means, not only for atlanta schools but schools across the country, is education

contributor steve perry. good to see you this morning. when you take a look at these numbers, they're staggering. 178 educators, 38 principals said to be involved and went on for as long as a decade. where was the oversight here? >> that's the good question. it appears that everyone was complicit. i don't understand how this happened. to be honest with you, there are great lengths that you have to go in order to cheat. to imagine a principal and a vice principal taking the test that the children have taken, sitting in a room, erasing the answers and calling out the right answers is disgusting. i don't understand how any of them get to keep their job and, in some cases, questions should be brought up about whether they should be able to keep their license to educate in public schools. >> atlanta public school system, some say, was run like a mob. one of the teachers told investigators that she cheated because she feared retaliation if she didn't. so systemic. how do you even begin to get to the bottom of who is responsible? >> that's not good enough for an

answer. we spend every day working very hard to tell children that just because your friends do something dumb doesn't mean you have an excuse to do that same dumb thing and this is dumb. i don't know how you get down to the bottom of it. but some heads have to roll. people have to lose their jobs. there needs to be an example, quite frankly, made of the individuals who have done this. many people blame no child left behind for these results, but there are millions of educators today who do the right thing. listen, we've had a tough year with some of our tests. i haven't had am uncomfortable with the way it went. i'm not coming back on monday telling my teachers we need to figure out how to erase these answers. that's absurd. >> dollars are attached to this. not every kid is learning. in some cases, right, they say you teach to the test rather than teaching kids skills and

ideas. in this case it's far more egregio egregious. do we have to rethink some of how we're educating? >> i don't think we have to rethink it. unfortunately, rules are not made for people who follow them. they're made for people who have broken them. when we're talking about teaching to the testify, we're talking about basic skill that is we want kids to be able to know and to do. one of the state standardized tests that we are asking children to perform well on. they're pretty basic. in many cases, they're reasonable. they're reasonable. we, as educators -- we just had a meeting. we're in school year round. get it in your head, we're going to do really well. the point being that we, as educators, have an obligation to respond to the test expectation. i don't know why the three-point line is where it is. that's where it is. if you play basketball, you have to make the shot behind the three-point line during the game in order to get three points. get over the fact that there are tests. >> right. and in some cases, it looks like

the biggest losers here are the kids. if they weren't understanding this material, weren't learning, weren't able to write or to understand the math. how do they catch up? >> kiran, that's really -- thank you so much for bringing that up. the biggest loser in this one is the child. we use these tests to determine how and what we teach children. in some cases, to provide them with essential services that will help them prepare for life. that's what education is about. and when you say that a child passed something that they did not pass, it goes beyond the inflation of grades that occurs every single day in schools throughout the nation. well-intended teachers saying that a child tried really hard. therefore, we're going to give them the b, when they really deserved the c minus. >> right. >> this is supposed to be an objective test, one in which we should have been able to see that the kids either could or couldn't do it. and then parents can make decisions outside the school even, whether they're going to provide the child with

additional services. and that was lost in atlanta and is lost anywhere anybody discusses doing something like this. >> the intern chief there is saying anyone involved in this scandal has, quote, forfeited the right to remain in the atlanta school system. we'll be following that situation and the fallout very closely. steve perry, founder of capital prep school. thanks for joining us. it's 45 minutes past the hour. >> announcer: this past year alone there's been a 67% spike in companies embracing the cloud-- big clouds, small ones, public, private, even hybrid. your data and apps must move easily and securely to reach many clouds, not just one. that's why the network that connects, protects, and lets your data move

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how about this -- cruze eco offers 42 miles per gallon. cool? ♪ 47 minutes after the hour. owner rupert murdoch shutting the paper down in the wake of a hacking scandal. now there's a report in another british tabloid saying staffers at "news of the world" attempted to hack the phones of 9/11 victims. pakistan is defiant in the obama administration to withhold $800 million in military aid. pakistan telling washington, in effect, keep your money. we don't want it. back to the bargaining table for the president and congressional leaders. they've agreed to meet around the clock, if necessary, to reach a deal on raising the debt

ceiling. the president says the deal must be done within nine days or america could default on its debts. tracking space debris at the international space station and the shuttle "atlantis." nasa is saying it's not a threat and no diversions will be needed to avoid the space junk. they say it's debris from a 1970s satellite. the midwest and southern states in the gripping heat. facing heat advisories. temperature temperatures could top 105 degrees. cities in four states, missouri, oklahoma, tennessee and indiana could see the heat index top out at 115 degrees. the dow, nasdaq, s&p 500 all set to open sharply lower this morning. feelings of uncertainty are still running high on wall street after that dismal jobs report that came out friday. and concerns over the continuing debt crisis in europe. jam-packed weekend in california. prince william and catherine, the duke and duchess of cambridge ended their north

american tour. stopped by a charity and even squeezed in a polo match. you're caught up on today's headlines.

this is a story that just continues to fascinate me. jaycee dugard, who spent 18 years in the clutches of a sex offender is speaking publicly about the first time of the ordeal. i'm fascinated every time i hear her speak. this is somebody who spent more of her life in cap activity than not. >> she was just 11 years old when she was kidnapped by philip garrido in 1991. she was headed to school. apparently he used a stun gun to capture her, to get her in his car. she later gave birth to two of his children. she tried to describe the nearly two decades of terror. >> there was not a day that i didn't cry. i felt like there would never, ever be a day that i wouldn't cry again. and then after a while, i told myself i can't cry anymore. >> what's the most haunting memory? >> that lock, hearing the lock.

i know i said that earlier, but for some reason that -- and the bed. it was a squeaky bed. squeaky pull-out bed. i guess the noise -- the sounds. it's weird what sticks in your head, but sounds. >> how did you stay sane? >> i don't know. i was still alive. i was still -- there was still hope. still hope. >> i'm trying to imagine how you are coping. i'm trying to imagine. >> i don't know. i can't imagine being beaten to death, you know. but -- and you can't imagine being kidnapped and raped, you know. so, it's just -- you just do

what you have to do to survive. >> she did that. she's 31 now. >> yes. >> raised her two children and she's now back home with her family. she's written a book about her ordeal, "a stolen life." >> on one side i want to are read her story. on the other, i just don't. >> it's very disturbing. >> what a horrifying story. 22-year-old singer and aspiring actress charged with burglarizing ed sullivan's manhattan theater where the dave letterman show is taped. police say james whitmore appeared to be intoxicated early sunday morning when he broke in one of the glass doors and trashed the building's lobby. lot of damage. fire at rihanna's concert in dallas sent fans home early. there was a malfunction with the pyrotech knicks. afterwards the star tweeted we set the stage on fire, literally. she tells her fans in dallas,

i've got to come back. soccer star david and victoria beckham gave birth to the family's first little girl named harper seven. really? that's what they're calling her? >> brooklyn, romeo and cruz. >> what's seven? >> i don't know. >> victoria is, quote, doing well, beckham wrote, and harper is healthy. >> congratulations. she wanted a little girl, said there was too many men in the house. kate hudson is a mom again. she gave birth to her second son on saturday. it is the first with her fiance, matthew belamy. hudson hasn't revealed her newborn's name yet. >> do we know the weight? i'm always puzzled about the whole weight thing. >> yes, especially when their weight is double what normal babies should be. >> everything is bigger in texas and apparently so are the babies. >> longview couple are now the

proud parents of a 16-pound baby born by c-section. that is about the weight of of a six to nine-month-old. >> we heard that he was on a breathing ap rattus. >> usually the mother has gestational diabetes when the babies are that big and the baby has problems as well. but cross your fingers that the baby is okay. e need a portable , please! [ nurse ] i'm a nurse. i believe in the power of science and medicine. but i'm also human. and i believe in stacking the deck.

things are getting better in new york. didn't we report the weather as being fair earlier and 79? it's gone up to partly cloudy and 88. it has proceeded from fair to sunny. >> that's right. earlier, we said -- we told you, because we were given word that tiger woods was going to be holding a press conference at 11:00 today. so in two hours. >> unclear. i think we thought he was talking to the golf channel. we are just hearing now from his agent -- we're working to

confirm this. but tiger woods agent apparently telling the associated press in response to these report that is there is no announcement coming. he said there's an erroneous report that he is making an announcement but he is not. for the moment, tiger woods is not making an announcement. we'll try to get to the bottom of this and find out where this misinformation is coming from. >> if you smoke, you may be having to pay more for health care. more companies are considering or doing this. charging smokers more for coverage than they charge nonsmokers. >> is it fair to ask employees who smoke to pay more for health insurance? >> on twitter, people should mind their own business and get -- off their high horse and quit picking on people who smoke. >> car insurance, life insurance or health insurance, it milwaukees no difference. risky behavior should result in higher premiums. >> the problem is that smoking is very clearly identifiably risky behavior as to generalliy not eating well. it's not